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26 March 2017

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Emerging risks can drive E&S growth: Napslo president

David Bull 23 March 2016

The E&S sector will continue to find new growth opportunities by embracing emerging risks through innovation, according to Gil Hine, president of the National Association of Professional Surplus Lines Office (Napslo).

Surplus lines underwriters and wholesale brokers are facing headwinds to top line growth as competitive pressures mount, in line with the broader P&C industry.

Speaking to Inside E&S after the Napslo mid-year meeting in Scottsdale, Arizona earlier this month, Hine said expectations among delegates were "not as robust" as they had been in past years.

"Everybody is looking at more moderate premium and revenue growth. There is a sense that to be flat this year may not be all that bad a performance," he suggested.

Hine, who is also president of Texas-based managing general agent and wholesaler McClelland & Hine, said his firm had seen a slowdown in submissions, particularly for contractors business.

Texas is naturally being heavily impacted by the oil price slump, which has hit production and projects across the state.

But despite the broader slowdown, the executive emphasized the opportunities presented by emerging risks for the E&S sector.

"Historically we've done an excellent job at being innovative. You look back at EPLI and other coverages where the incubation was in the specialty market and as data developed it migrated to the standard market.

"That's the essence of who we are. We're innovators and risk takers, and we find those opportunities and take advantage of them," he said.

Hine highlighted drones and semi-autonomous vehicles as examples of emerging risks that will present opportunities for the E&S sector.

"Technology changes the risk environment. As an industry we'll have a chance to bring our risk taking appetite and ability to innovate products to start developing those markets," he said.

Meanwhile, the progress of legislation to open up the private market for flood insurance also presents a major opportunity for surplus lines players.

"The really exciting thing in the flood arena is that the technology involved and ability of carriers to do much more sophisticated risk modelling then even five or 10 years ago will present significant opportunities over the coming years," he said.

"The legislation is a huge win for Napslo, the wider industry and consumers," Hine concluded.

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